USDJPY TECHS: Bear Cycle Extends

• Belgium: We look for the 10-year syndication to be held in the week ahead (with the potential for it to be held in the W/C 13 January). We look for the same E7.0bln size we have seen in the past two years with some upside risk.
• Ireland: There is one Irish syndication due in 2025 and given that there is already a May-35 IGB outstanding (that was originally issued as a 15-year bond), we see around a 50% probability that this year's new issue is not a 10-year with 15-year and 30-year both possibilities. We expect the transaction to take place in the week ahead and pencil in a E3bln size.
• Italy: We pencil in a new 15-year BTP in the week ahead for E10bln. The maturity in our view is quite uncertain and there is also a potential for a new 30-year BTPei.
• Portugal: We expect a syndication in the week ahead (possibly the following week) and there is a possibility for a 10-year but this may not be launched in January as the current 10-year benchmark, the 2.875% Oct-34 OT, is still smaller than other comparable duration OTs. There is also an existing Oct-35 OT that was launched as a 15-year issue in 2020. We therefore think it most likely that we see a new 2033 or 2040 OT launched.
• Slovenia: We don’t have a strong conviction regarding the maturity, but we expect a Slovenian syndication in the upcoming week.

For more on our wider syndication expectations and expectations for new bonds in 2025 see the MNI Eurozone Issuance Deep Dive: 2025 Outlook here.

• RES 4: 5040.00 High Dec 9 and a key short-term resistance 
• RES 3: 5027.00 High Dec 13      
• RES 2: 5002.00 High Dec 18 
• RES 1: 4942.00 High Jan 2          
• PRICE: 4917.00 @ 06:33 GMT Jan 6  
• SUP 1: 4829.00 Low Dec 20 and key short-term support       
• SUP 2: 4800.87 76.4% retracement of the Nov 21 - Dec 9 bull cycle      
• SUP 3: 4775.00 Low Nov 29  
• SUP 4: 4727.00 Low Nov 21 and a key support  

A bull cycle in the Eurostoxx 50 futures contract remains intact. However, the recent move down continues to highlight a corrective phase and despite the latest bounce, a short-term bear threat remains present - for now. Key short-term support has been defined at 4829.00, the Dec 20 low. A break of it would confirm a resumption of the bear cycle and open 4800.87, a Fibonacci retracement. Initial firm resistance to watch is at 4942.00, the Jan 2 high.

Austria, Germany, Spain and France are all due to hold auctions this week. We also pencil in syndications from Belgium, Ireland, Italy, Portugal and Slovenia. We estimate gross issuance for the week at E56.3bln. 

• Tomorrow, Austria will hold a 5/50-year RAGB auction with a combined E2.013bln of the 2.50% Oct-29 RAGB (ISIN: AT0000A3EPP2) and the 0.70% Apr-71 RAGB (ISIN: AT0000A2QQB6) on offer.
• Also tomorrow , Germany will sell E4.5bln of the 2.00% Dec-26 Schatz (ISIN: DE000BU22072).
• On Wednesday, Germany will return to sell E5bln of the new Feb-35 Bund (ISIN: DE000BU2Z049). The coupon will be announced tomorrow morning.
• On Thursday, Spain will hold a Bono/Obli and ObliEi auction. On offer will be a combined E5.5-6.5bln of nominals including the new 3-year 2.40% May-28 Bono (ISIN: ES0000012O59), the on-the-run 7-year 3.10% Jul-31 Obli (ISIN: ES0000012N43) and the off-the-run 20-year 2.90% Oct-46 Obli (ISIN: ES00000128C6). Alongside this E250-750mln of the 2.05% Nov-39 Obli-Ei (ISIN: ES0000012M69) will be on offer.
• Finally on Thursday, France will hold an LT OAT auction for a combined E11.0-13.0bln. This matches the largest auction size of 2024, but given this year’s higher issuance target should be no surprise. On offer will be on-the-run 10/20/30-year OATs and an off-the-run 12-year issue: the 3.00% Nov-34 OAT (ISIN: FR001400QMF9), the 1.25% May-36 OAT (ISIN: FR0013154044), the 2.50% May-43 OAT (ISIN: FR001400CMX2) and the 3.25% May-55 OAT (ISIN: FR001400OHF4).

For more on this week's issuance and a look ahead to next week see the MNI EGB Issuance, Redemption and Cash Flow Matrix here.